Abstract:

Abstract This paper focuses on the levels of foreign direct investments coming to Georgia. The main areas addressed by this study include: how to create a favorable investment climate in Georgia and on the possible means of encouragement of FDI inflows in the Georgian economy. This paper aims to fill the knowledge gap in the area of foreign direct investment (FDI) research in Georgia. Various dimensions of FDI were analyzed from a comparative perspective drawing on the case studies of investors in Georgia. The analysis first focused on major obstacles that investors face while performing. Then, attractive features of business climate of Georgia were investigated. Finally, performance issues confronting FDI firms were analyzed. The study results indicated that reasons to invest in Georgia are geopolitical situation and having empty market, and incentives to improve the investment climate of Georgia were State guaranties, tax holidays, political stability, development of infrastructure and advertisement. Another result of the study was that Georgian Government does everything to have free market conditions and do not intervene to the economy. Although the issue of safety affects foreign investors, it does not act as a major deterrent of FDI inflows. The most serious problem influencing the performance of FDI firms were found to be not enough skilled and educated local labor force, economic and political uncertainty. In general, however, it was found that foreign investors have been satisfied with their performance largely due to the relatively smooth competition and the availability of several market niches in country market.

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